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What is currently happening to London property prices and is now the right time to sell?

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Published: 4th November 2010

Who do we listen to and what are the facts

Whilst one Chief Economist predicts one outcome, another will be wearing his beer goggles and can see an entirely different picture on the horizon so who do we listen to and what are the facts?

Tougher lending criteria adopted by banks and building societies together with greatly reduced mortgage lending in general has already significantly contributed to the reduction of the first time buyer activity. In turn, this has taken the heat out of any upward demand for property from the lower end of the market. Whilst demand for London property has widely been reported as having remained buoyant there is little doubt that any sustained high level of demand in the short term needs to be fuelled in part by the first time buyer.

Economic recovery

Depending upon in which ‘comic strip’ we regularly indulge, if we believe all that we read, the economic recovery has shown signs of sprouting it’s famous shoots. Right now however, the question that undoubtedly remains is, just how sustained and to what extent should we expect any recovery to be at such uncertain times as this.

There have been suggestions that that an increase in interest rates could help to reduce inflation but what impact would that have on the current housing market?

Mortgage lending tightened

The mortgage lending belt has already been tightened down to a size zero. If interest rates were to increase even marginally this would certainly result in further caution from new borrowers and could even prompt some property owners (especially landlords with ‘Buy to Let’ investments) into considering selling.

Of course, nobody knows exactly what impact this could all have on property prices over the shorter term but for existing home owners, it is certainly worth considering whether you are in for the medium to long term or do you plan on selling in the near future and if so, will you be re-investing in property?

Benefit of hindsight

In any event, for as long as hindsight continues to be an exact science, it is probably that good old crystal ball that is still the most valuable tool when it comes to predicting the short term movement of property prices.
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Author: Nigel Coan

Nigel Coan is Managing Director of London Homes Online.

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